Wednesday, March 7, 2018

Well, it's the first quarter and carrier(s) historically have restructured its rate plans in order to remain competitive or gain the upper hand. Restructuring is different than running short term promotions to goose up the quarter's number. T-Mobile and Sprint are already doing that. For this first quarter, we find AT&T 'enhancing' their two rate plans, formerly known as Unlimited Choice and Unlimited Plus. Now, the company adds the Enhanced moniker to lengthen the product names. The announcement was buried in a press release about regional promotion offers and the new rate plans began life on March 1.

Each line includes up to 15GB/month tethering. Each account includes free HBO for life regardless of whether customer subscribes to an AT&T video service and a $15/month video credit for DIRECTV or DIRECTV NOW.

Full 4G LTE speeds (vs. 3Mbps previous). Each account includes free HBO for life regardless of whether customer subscribes to an AT&T video service and a $15/month video credit for DIRECTV NOW.

Looking at the new versus the old:

the additional line rate went up

the first/single line went down

more GB for tethering 10 -> 15 GB

no more throttled at 3Gbps (DL) for Choice subs

$15 video credit - DTV or DTVNow

Clearly, there are pros and cons. Some may view increased cost, some may view the changes gives more choice and features. Others will see that it's changing the tables (but continuing the strategy) for bundling wireless service and video. It's all those things depending on one's own perspective. But the true test will be how competitive the 'enhanced' move is against other carriers, and which ones? Let's face it, creating and refining rate plans isn't a simple task (hat tip to all price planners) but the final product needs to be an effective Swiss Army knife. What's the holistic view and how do the Enhanced plans stack up?

Those who long follow carrier competition, you know that typically the big two's rate plan moves are usually against each other. Yet, in today's environment, T-Mobile's multi-year momentum needs to be addressed. (Way back machine: In the late 2000s, AT&T went toe-to-toe against T-Mobile's value pricing. In an earnings call, then CFO Pete Richter said that it was a mistake and AT&T wasn't going to do it anymore.) That was then, this is now.

AT&T introduced Unlimited Choice to address potential and existing customers' price sensitivity and wanted the AT&T network (the same is true for Verizon's gounlimited plan). As the chart above shows, Choice Enhanced beats T-Mobile One on single line but stays in line up to line 4 (all non-promotional pricing). Moreover, the new Choice Enhanced pricing beats that of Verizon's gounlimited. The same holds true for Plus Enhanced against Verizon's beyondunlimited. Both restructured plans provide a nice $10+ price gap against its Verizon counterpart.

Moving forward, can T-Mobile stand losing out to price against AT&T? Maybe, as Magenta will argue that its real competitor is AT&T's Plus Enhanced plan which it beats. Sprint for its part remains the price leader and with its promotions, it just needs to acquire new subs. Yet Verizon is in a quandary as this AT&T price move not only affects consumers but the more lucrative enterprise and other business segments. First in my mind is FirstNet. While AT&T is the lone FirstNet provider, it needs to bring the public safety entities into the FirstNet fold. What better tool than this more advantageous rate plan to help shift first responder accounts from Verizon onto AT&T?

It's the third month of the first quarter. How vulnerable are Verizon Wireless consumers and business customers to this change? The rate plan is only a week old but I suspect that AT&T on the feet sales folks have been talking the price savings up in business and potential FirstNet accounts. The question is will Verizon react this month or the next? The price gap is decent. Tempus fugit.